Oil prices slip to seven-week low

Oil prices have tumbled to seven-week lows amid concerns that the slowing US economy will weaken demand.

US sweet, light crude fell $2.23 to settle at $123.26 a barrel - more than $20 off their peak earlier in July, when prices reached a record $147.27.

Brent crude in London also fell, dropping $1.92 to $124.52.

The oil market has been volatile as traders assess whether there will be enough supply to meet demand, with some predicting further price falls.

Analysts at Lehman Brothers predict oil prices could drop below $100 by the end of the first quarter of 2009.

But others are sceptical.

"Nothing in the fundamental drivers has changed," said Harry Tchilinguirian, an oil analyst at BNP Paribas.

Volatile market

Since last September, traders have been betting that the need for oil from economies, such as China, would continue to power the demand for oil.

Earlier this month, the International Monetary Fund (IMF) upgraded its economic forecasts for these countries.

At the same time, tensions between politically unstable oil-producing nations and the West sparked fears that supply would be constrained.

The weakening US currency has also encouraged investors to switch into commodities, which have been seen as a more attractive investment as the US economy falters.

A slight rebound in the dollar after a smaller-than-expected decline in new housing sales helped to give oil prices some relief, analysts said.

Oil prices extend losses as Dolly fears recede

Oil prices fell further on Wednesday as the market expected Hurricane Dolly to avoid energy installations in the Gulf of Mexico, traders said.

The market was also awaiting the latest weekly update on the health of crude stockpiles in the United States, which is the world's biggest consumer of energy. Falling inventories could see prices rebound, they added.

New York's main contract, light sweet crude for September delivery, dropped by 1.57 dollars to 126.85 dollars a barrel in electronic deals. The August contract expired on Tuesday at 127.95 dollars, a long way off its historic high of 147.50 dollars that had been set on July 11.

Also Wednesday in early London trading, Brent North Sea crude for September delivery shed 1.77 dollars to 127.78 dollars.

Hurricane Dolly churned over the Gulf of Mexico on Wednesday towards the US-Mexican border, forcing thousands in Mexico to evacuate their homes as US oil rigs put staff ashore and the US Navy sheltered aircraft.

Packing sustained winds of 130 kilometres (80 miles) per hour, the second hurricane of the season was about 140 kilometres southeast of the Texas border town of Brownsville, the US National Hurricane Center said.

The storm was moving northwest at 15 kmph (nine mph), the centre said at 0600 GMT.

Some oil drilling companies in the area have evacuated personnel from their offshore rigs as a precaution.

The US Department of Energy was meanwhile to publish weekly energy stockpiles data at 1430 GMT.

Oil prices climb, with eyes on Dolly storm

World oil prices rose on Tuesday as US forecasters issued a hurricane warning as Tropical Storm Dolly swirled through the Gulf of Mexico, where many US energy facilities are based.

Brent North Sea crude for September delivery added 1.03 dollars to 133.64 dollars per barrel in morning London trade.

New York's main contract, light sweet crude for August delivery, gained 99 cents to 131.97 dollars a barrel.

"Dolly is one of the factors. The situation is not so serious at the moment, but (the storm's) direction is hard to predict," said Ken Hasegawa, a broker at Newedge Japan.

The market had rebounded on Monday, after falling more than 16 dollars last week, as Dolly bounded into the Gulf of Mexico and the international community tightened pressure on oil producer Iran to halt its nuclear programme.

Forecasters issued a hurricane warning on Tuesday as Tropical Storm Dolly threatened to grow into a hurricane within 24 hours near the Mexico-Texas border.

"A hurricane warning is in effect for the coast of Texas from Brownsville to Port O'Connor. A hurricane warning is also in effect for the northeast coast of Mexico from Rio San Fernando north to the border with the United States," the Miami-based National Hurricane Center said at 0600 GMT.

The warning means hurricane conditions are expected in the area in the next 24 hours.

"Preparations to protect life and property should be rushed to completion," the NHC warned.

At 0600 GMT, the center of the storm was about 320 miles (515 km) southeast of Brownsville, Texas, as it moved westward near 17 mph (28 km/hr), it said, noting that "the center of Dolly should be very near the western coast of the Gulf of Mexico on Wednesday."

It was packing maximum sustained winds near 50 mph (85 km/hr) with higher gusts.

US energy major ExxonMobil has started evacuating non-essential personnel from some offshore oil production facilities expected to be in Dolly's path, but the company said there had been limited impact on production thus far.

Chevron and Royal Dutch Shell have also moved non-essential staff from their operations in the western part of the Gulf of Mexico.

The Atlantic hurricane season, which began in June and lasts until the end of November, usually peaks from September onwards and has been largely uneventful until now.

Investors are also watching closely for any developments in the Iran nuclear talks aimed at getting Tehran to halt its uranium enrichment programme, dealers said.

Oil prices higher in Asia after Iran nuclear talks stall

Oil prices were higher in Asian trade on Monday after weekend talks in Geneva aimed at convincing Iran to halt its nuclear programme made little progress, dealers said.

In early morning trade, New York's main contract, light sweet crude for August delivery rose 82 cents to 129.70 dollars a barrel.

Brent North Sea crude for September delivery added one cent to 130.20 dollars.

Investors are focused once again on the geopolitical situation in the oil-rich Middle East after efforts to make Iran halt its nuclear programme stalled Saturday during talks in Geneva over the weekend.

"It was a constructive meeting, but still we didn't get the answer to our questions," EU foreign policy chief Javier Solana said after the talks that aimed to get Tehran to give up its disputed atomic plans in return for incentives.

"There is always progress in these talks, but insufficient," he said, adding that the Iranians were expected to respond to the latest negotiations within two weeks.

He did not overtly address the question of further sanctions, but the US State Department after the talks warned Iran to accept the incentives or face "further isolation."

"We hope the Iranian people understand that their leaders need to make a choice between cooperation, which would bring benefits to all, and confrontation, which can only lead to further isolation," spokesman Sean McCormack said in a statement.

Oil price drop in volatile market

The price of oil has recorded its biggest weekly drop, slipping under $130 a barrel on Friday.

Crude prices have fallen more than 11% over the past four days, knocking $15 off a barrel of oil in that period.

Fears of high prices weakening the US economy set oil off on one of the biggest weekly falls since 1983.

Sweet crude for August delivery fell 41 cents to settle at $128.88 in New York - far off the record of more than $147, reached one week ago.

A key reason for this week's decline was evidence of falling demand for gasoline in the US, despite it being the peak summer driving season, analysts said.

Another key factor was the easing of tensions in the Middle East and Nigeria, both major production points for crude.

"From both a demand and supply perspective, the fundamental picture has turned more bearish," said Walter de Wet, an analyst at Standard Bank in Johannesburg.

It has been a volatile month for commodities. Oil prices edged up after the IMF raised its global economic forecast for 2008 earlier this week.

And although a pipeline in Nigeria belonging to Italian energy group Eni was blown up, another pipeline belonging to Chevron in the country has been repaired after sabotage in June.

Also, the US said on Wednesday it was sending an envoy to Geneva to join nuclear talks with Iran for the first time.

Military action against Iran could lead to the closure of the Straits of Hormuz, through which nearly half of the world's traded oil moves.

Roy Mason, of oil consultancy Oil Movements, estimated on Thursday that Opec oil exports, excluding Angola and Ecuador, would rise by 560,000 barrels per day in the four weeks to the beginning of August.

Oil prices higher in Asian trade

World oil prices rebounded in Asian trade on Thursday after sharp falls on a bigger-than-expected rise in US crude reserves, analysts said.

New York's main futures contract, light sweet crude for August delivery, had dropped more than 10.50 dollars over two days.

On Thursday the benchmark contract rose 23 cents to 134.83 dollars a barrel after closing Wednesday at 134.60, off 4.14 dollars, at the end of US trading hours.

That fall followed a dive of 6.44 dollars on Tuesday, its sharpest daily decline since January 1991.

Brent North Sea crude for September delivery gained 49 cents to 136.30 dollars.

The Brent August contract expired on Wednesday, down 2.56 dollars at 136.19 dollars in London.

The US Energy Information Administration said Wednesday that crude inventories rose by 3.0 million barrels to 296.9 million barrels in the week ending July 11, confounding market expectations for a decline of 2.2 million barrels.

Oil prices had soared after breaking through 100 dollars at the start of 2008, and hit peaks above 147 dollars last Friday. The record prices sparked protests around the world, and fears for economic growth.

Oil prices lower on stronger dollar

World oil prices eased in Asian trading on Tuesday on the back of a slightly stronger US currency, dealers said.

New York's main contract, light sweet crude for August delivery, was off 41 cents to 144.77 dollars a barrel from Monday's close of 145.18 dollars at the end of US trading hours.

Brent North Sea crude for August delivery dropped 24 cents to 143.68 dollars a barrel.

"The dollar rally has put some downward pressure on oil," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

A strengthening greenback can make oil less affordable for buyers using other currencies, potentially curbing demand and crude prices.

But dealers expect a limited dip in crude prices because of supply concerns and geopolitical tension in the oil-rich Middle East over Iran's uranium enrichment programme.

Tehran insists its nuclear drive is aimed solely at generating energy, but some Western nations fear it could be aimed at making an atomic bomb and have called for a freeze of its uranium enrichment.

Dealers fear potential supply disruption from Iran in the event of conflict with the United States or Israel. Iran is the second-biggest crude oil producer in the Organisation of the Petroleum Exporting Countries (Opec) cartel.

"There is limited downside risk to oil pricing in the coming weeks because of supply-side concerns.... the situation over Iran remains fluid," said Shum.

A five-day strike by oil workers in Brazil against the state-run company Petrobras is also expected to exacerbate supply concerns, dealers said.

Petrobras said oil output was cut seven percent as the strike affected platforms offshore from Rio de Janeiro in the Campos basin, which provides 82 percent of the firm's daily 1.8-million-barrel output.

Brazil is the world's 12th largest crude producer.

"Recently, the oil complex has been driven by supply threats," analysts from Societe Generale said in a report, adding "tensions and rhetoric over the Iran nuclear programme continue to run high."

Oil prices have almost doubled over the past year and have soared since breaking through 100 dollars at the start of 2008. The record prices have sparked protests around the world amid fears for economic growth.

Oil prices down in Asia trade

Oil prices fell by more than 1.50 dollars in Asia on Monday after supply worries helped push prices to a record high last week.

New York's main oil contract, light sweet crude for August delivery, fell 1.65 dollars to 143.43 dollars a barrel.

The contract hit an intra-day peak of 147.27 before closing at 145.08, up 3.43 dollars on the New York Mercantile Exchange Friday.

Brent North Sea oil for August delivery fell 1.24 dollars to 143.25. On Friday Brent jumped as high as 147.50, a new intra-day record, before settling up 2.46 dollars at 144.49 in London.

Tensions between the West and Iran, along with unrest in Nigeria, have helped to support the high prices, according to dealers.

Oil prices have almost doubled over the past year and have soared since breaking through 100 dollars at the start of the year. The record prices have sparked protests around the world amid fears for economic growth.

Oil prices rally as G8 promises transparent market

Oil prices rebounded slightly on Wednesday after falls of more than five dollars a day earlier, as world leaders pledged to make the crude market more transparent.

Brent North Sea oil for August delivery jumped 1.88 dollars to 138.30 dollars a barrel in electronic deals.

New York's main oil contract, light sweet crude for August delivery, won 1.60 dollars to 137.64 dollars.

Oil prices had nosedived Tuesday as falling global equities and resurgent concerns about an economic slowdown stoked fears about future energy demand, traders said.

Group of Eight leaders pledged Wednesday to improve transparency and the supply and demand balance in the oil market by boosting dialogue between producing and consuming nations.

"In response to the sharp rise in oil prices, we agreed to improve balance in supply and demand through efforts and dialogue by both producing and consuming countries to improve transparency," they said in the final statement following their summit in Japan.

Oil prices dip amid G8 warning on sky-high crude

World oil prices fell further on Tuesday as leaders of the Group of Eight rich nations warned on soaring crude costs and appealed for more production to dampen the market.

Brent North Sea oil for August delivery slid 45 cents to 141.42 dollars a barrel in electronic deals.

New York's main oil contract, light sweet crude for August delivery, shed 32 cents to 141.05 dollars.

"It seems to me like oil traders are looking with some interest at the headlines coming out of the G8 meeting," said Dave Ernsberger, Asia director of global energy information provider Platts in Singapore.

The London Brent contract hit an all-time peak of 146.69 dollars and New York crude struck a record high of 145.85 dollars last Thursday.

Soaring oil and food prices pose a "serious challenge" to stable worldwide economic growth, Group of Eight (G8) leaders from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States warned on Tuesday.

At their meeting in Japan, they also called for an increase in oil production and refining capacity to help stem soaring prices.

"The G8 leaders are clearly trying to talk this market down," Ernsberger added.

Oil had slumped on Monday, losing almost four dollars in New York, on the back of easing geopolitical tensions over Iran's nuclear program and a strengthening US dollar.

However, jitters about key crude producer Iran returned to haunt the market on Tuesday.

Iran would "set on fire" Israel and the US navy in the Gulf as its first response to any American attack over its nuclear programme, an aide to supreme leader Ayatollah Ali Khamenei warned on Tuesday.

"The first US shot on Iran would set the United States' vital interests in the world on fire," said Ali Shirazi, a mid-ranking cleric who is Khamenei's representative to the naval forces of the elite Revolutionary Guards.

"Tel Aviv and the US fleet in the Persian Gulf would be the targets that would be set on fire in Iran's crushing response," he said, according to the Fars news agency.

The United States and its top regional ally Israel have never ruled out attacking Iran over its nuclear drive, which the West fears could be aimed at making nuclear weapons.

There has been concern an attack against Iran could be imminent after it emerged Israel had carried out manoeuvres in Greece that were effectively practice runs for a potential strike against Iranian nuclear facilities.

Shirazi said that "the Zionist regime is pressuring the White House leaders to plan a military assault on Iran" and Iran would react "if they commit such a stupidity."

Crude futures had scaled record heights last week owing to simmering tensions over Iran, the weak US dollar and tightening global supplies, traders said.

Oil prices pull lower

Oil prices eased on Monday but remained at elevated levels after a long US holiday weekend, as traders mulled an offer from crude producer Iran to hold talks on its nuclear drive.

Brent North Sea oil for August delivery slid 17 cents to 144.25 dollars a barrel in electronic deals. That was not far off the record high 146.69 that was struck last Thursday.

New York's main oil contract, light sweet crude for August delivery, shed 1.66 dollars to 143.63 dollars on Monday. The contract had punched a life-time high of 145.85 on July 3.

US floor trading was shut last Friday but electronic trade continued amid the Independence Day holiday.

Oil blazed a record-breaking trail last week, driven by geopolitical tensions over Iran, the weak US dollar and tightening global supplies, traders said.

Sky-high oil prices -- which ramp up the cost of petrol, jet fuel, and domestic electricity and gas -- have triggered fears about higher inflation and slower economic growth. They have also sparked protests around the world.

Over the weekend, Iran offered to negotiate on its nuclear drive but without a freeze on uranium enrichment, in its first comments since responding to an international package aimed at ending the standoff.

EU foreign policy chief Javier Solana said Monday he hoped to meet later this month with Iran's top nuclear negotiator, after Tehran gave its response to a package of incentives to halt uranium enrichment.

"There is some kind of relaxing on the part of Iran," said Tony Nunan, a manager with Mitsubishi Corp's international petroleum business in Tokyo.

"So any kind of reduction in tension there will take some of the price pressure off."

Iran is locked in a standoff with the West over its nuclear energy programme. The Islamic republic claims it is for generating electricity while Western nations fear the development of nuclear weapons.

Elsewhere, the United States and Japan called Sunday for urgent action on red-hot oil and food prices that could derail the global economy.

Japanese Prime Minister Yasuo Fukuda said he and US President George W. Bush agreed on the need for urgent efforts to tackle the issue. Both are attending the G8 summit, which began in Japan earlier on Monday.

Oil prices strike record high $146 per barrel

The price of oil has continued to climb - with Brent crude rising above $146 a barrel for the first time.

Brent crude rose by $2.08 to $146.34 a barrel in London. US light, sweet crude rose by more than $1 to $145.22.

Oil prices have risen significantly since the US government announced on Wednesday that its crude stockpiles had fallen by more than expected last week. A spokesperson for the motoring organisation the AA called the rate of increases "eye watering".

A barrel of Brent crude has risen by almost $4 since the beginning of the week.

The AA estimates that a $2-a-barrel rise in crude oil means an extra penny on fuel prices at the pump. This takes a number of weeks to feed through to the fuel stations.

"The market can absorb a little bit of the increase on the forecourt, but nothing like this," the AA's Paul Watters told the BBC.

Currently, unleaded petrol is currently 118.95 pence per litre on average and diesel 132.20p, according to Experian.

An AA survey in April showed that almost two thirds of motorists were either doing fewer trips by car or cutting back on other spending as a result of higher fuel prices.

"This is only going to happen more. This is very very bad news for the economy," Mr Watters added.

Fuel prices

Oil prices are expected to rise even further.

Russian President Dmitry Medvedev, speaking ahead of next week's G8 meeting of leading industrialised nations, predicted that prices would climb to $150 a barrel.

"Unfortunately, rising oil prices create problems for the world's economy," he said.

Companies across the world have been suffering under the strain.

Air New Zealand has become the latest airline to say it cannot continue to absorb the rising cost of jet fuel, which is now more than $170 a barrel.

The carrier announced on Thursday that domestic fares would rise by 3% and international fares by 5%.

That followed a profit warning from Hong-Kong based airline Cathay Pacific on Wednesday.

Supply concerns

Some observers have blamed speculators for pushing oil prices higher.

However, Prime Minister Gordon Brown, speaking to a committee of MPs, said he thought an imbalance in supply and demand was the primary reason for the spike in prices.

"You can't put down to speculation the whole of the problem we are dealing with at the moment," Mr Brown said.

The president of oil group Opec has blamed the weakening of the dollar, which makes oil a more attractive investment.

Dr Chakib Khelil told the BBC that a rise in eurozone rates would weaken the dollar further, and could cause oil prices to rise even further.

The European Central Bank is due to give its latest rate decision at 1245 BST, and there is speculation that the main borrowing cost may increase by a quarter of a percentage point to 4.25% from 4%.

Overnight, the dollar traded at its lowest level against the euro for more than two months, falling to $1.5891 per euro.

"The current market is being driven by the weaker dollar and with the equity markets a disaster, investment money is looking for a more profitable market," said Tetsu Emori, a Tokyo-based fund manager.

Oil prices hold above 142 dollars ahead of US energy report

Oil prices breached 142 dollars per barrel again on Wednesday, nearing recent record heights, as traders awaited the latest weekly snapshot on energy stockpiles in the United States.

New York's main oil contract, light sweet crude for August delivery, jumped 1.06 dollars to 142.03 dollars a barrel in early European trade.

Brent North Sea oil for August delivery climbed 1.34 dollars to 142.01 dollars a barrel.

Prices rocketed to record highs on Monday on the back of tensions over oil producers Iran and Nigeria, and as the dollar remained weak against other major currencies, traders said.

London Brent oil scored an all-time high of 143.91 dollars and New York crude enjoyed a life-time peak of 143.67.

Concerns over geopolitical tension in the Middle East, the struggling US dollar and unrest in Nigeria continued to drive the market, dealers said.

"They are talking about the usual stuff like the weak dollar, Iran and Nigeria," said Clarence Chu, a trader with Hudson Capital Group, a New York-based energy trading house.

"I would say people are still leaning towards the bullish side but they are looking for new news."

He added that the market would seek fresh direction from the US Department of Energy's oil inventories report that was due for publication later Wednesday.

The weekly US update is crucial for the market because the United States is the world's biggest energy consuming nation, followed by number two China.

A weak US currency, meanwhile, makes dollar-denominated raw materials like oil cheaper for buyers using stronger currencies, and therefore tends to stimulate demand.

Oil prices rise above 141 dollars after Opec comments

Oil prices jumped beyond 141 dollars a barrel on Tuesday after the president of Opec said there was uncertainty surrounding future investment in facilities to boost crude output.

New York's main oil contract, light sweet crude for August delivery, was up 1.40 dollars at 141.40 dollars a barrel at about 0820 GMT.

Brent North Sea oil for August delivery climbed 1.50 dollars to 141.33 dollars a barrel.

On Monday, crude futures had struck record high levels close to 144 dollars, as the US currency remained weak against the euro, traders said.

Brent soared to an all-time high of 143.91 dollars and New York crude to a historic peak of 143.67.

On Tuesday the president of Opec, Chakib Khelil, said the oil producers cartel had concerns about future demand which led to uncertainty investing in capacity to increase production.

"The concern we have is about the security of demand," Khelil, who is also Algeria's energy minister, told an energy conference in Madrid.

He told the World Petroleum Congress that there were "big uncertainties" about making huge investments in infrastructure to increase output from members of the Organization of Petroleum Exporting Countries, which pump about 40 percent of world oil.

Global oil prices have doubled in the past year and have risen by almost 50 percent since the start of 2008, when they breached 100 dollars for the first time, triggering fears over inflation and slower economic growth.

Consumer countries blame record prices on tight supplies amid strong demand and unrest in producer countries such as Iran, Iraq and Nigeria. In particular, they accuse OPEC of not producing enough crude.

The 13-nation cartel, however, insists that the weak US currency is at fault, as it drives up demand for dollar-denominated oil from foreign buyers.

Oil prices close in on record-high 143 dollars

World oil prices rose to within touching distance of a record-high point of 143 dollars on Monday, as French truckers protested at high fuel costs and energy leaders met to discuss soaring crude.

New York crude oil had hit an all-time record of 142.99 dollars on Friday as the US currency remained weak. The ailing dollar has fuelled demand for oil, which is priced in dollars, from traders holding stronger currencies.

In early European trading on Monday, London's Brent crude struck a record high 142.98 dollars a barrel, one cent above its previous high reached last Friday.

Brent North Sea oil for August delivery later stood at 142.60 dollars a barrel, a rise of 2.29 dollars from Friday's close.

Meanwhile, New York's main oil contract, light sweet crude for August delivery, jumped by 2.35 dollars to 142.56 dollars per barrel on Monday, after an intra-day peak of 142.94.

Crude futures have doubled in the past year, triggering fears over inflation and slower economic growth.

On Monday, high fuel prices sparked protests among hundreds of truckers across France, blocking main highways and snarling commuter traffic around Paris.

Leading figures in the oil world gather in Madrid on Monday for one of the industry's biggest events that will focus on the future of the sector at a time of unprecedented crude prices.

A week after failing to deflate the price of crude at a summit in Saudi Arabia, the world's biggest oil producers and consumers will get another chance during talks here to explore ways of calming tense global energy markets.

More than 3,000 delegates, including leading corporate and political figures, are attending the four-day World Petroleum Congress (WPC), which runs from Monday to Thursday after an official opening reception on Sunday.

Oil prices hit Japanese inflation

Rising oil and commodity prices sent Japanese inflation rising to the highest for a decade in May.

Core inflation, which excludes volatile fresh food prices, rose 1.5% from the same month in 2007.

Household spending fell 3.2% in the month, according to the Ministry of Internal Affairs and Communications.

Japan struggled with deflation until last year, but Friday's figures showed consumers reining in their spending as the prices of basic items rose.

Non-fresh food prices soared, with spaghetti up 32.2%, instant noodles up 20.7% and white bread rising 12%.

Japanese drivers were hit particularly hard as the government reinstated a fuel tax that had been suspended in April.

"The impact of higher raw material prices on corporate earnings and consumer sentiment still warrants close attention," said Japanese Economics Minister Hiroko Ota.

Oil price still near record $142

The price of crude oil has retreated slightly after hitting record highs above $142 a barrel, amid concerns that supply will not meet demand.

In London, Brent crude was trading at $140.16, having earlier hit $142.13.

New York light crude had climbed as high as $142.26 a barrel, but later fell back to $140.34.

Producers' group Opec has been under pressure to boost production, though recent reports have shown its members are split over whether to lift output.

Libya has threatened to cut production because the market is well supplied.

Libyan threats

Libya's most senior oil official, Shokri Ghanem, said on Thursday he was looking into the possibility of cutting production in response to US threats against oil producers.

Analysts blame the price of crude on a variety of factors from basic supply and demand to hedge funds.

Opec has said speculators have played a part in the oil spike this year, but others are not convinced.

"We believe the factors driving oil prices higher are fundamental and not speculative," Deutsche Bank said in a research note.

"Oil needs to rise to $150 a barrel for oil as a share of global Goss Domestic Produce to reach the levels that occurred in the early 1980s," according to the bank.

But tensions between oil consumers and producers are rising.

The US House of Representatives has passed a bill that would allow the Justice Department to sue Opec members for limiting supplies.

But the bill has yet to be backed by the Senate and the White House has already said it would veto the bill.

There was also scepticism about whether there will actually be a cut in Libya, because of soaring prices.

"I doubt that any real effort in cutting output would be forthcoming, considering that pricing continues to hit new records," said Victor Shum, an analyst at Purvin & Getz.

'Radically new level'

Meanwhile, the chief executive of Gazprom, Alexei Miller, has been talking down the influence of Opec.

Saying that Opec had no real impact on prices, he told the Financial Times: "Not a single decision has been passed of late that would really influence the global oil market."

He also said that the world was undergoing "a great surge in oil and gas prices, which will end with prices at a radically new level".

Mr Miller predicted that Gazprom would become the most influential company in the energy business.

On Friday, the firm approved the replacement of former chairman Dmitry Medvedev, who is now Russian president, with former prime minister Viktor Zubkov.

Oil prices ease ahead of US report

Oil prices eased in Asian trade on Wednesday ahead of a weekly report on US energy stockpiles and after Opec's president rebuffed calls for the cartel to boost output.

New York's main oil futures contract, light sweet crude for August delivery, fell 19 cents to 136.81 dollars a barrel after rising 26 cents to close at 137.00 dollars per barrel in New York on Tuesday.

Brent North Sea crude for August eased six cents to 136.40 dollars following a climb of 55 cents to 136.46 dollars in London.

Oil prices have almost doubled over the past year and last week both contracts struck intraday highs near 140 dollars a barrel.

The soaring crude costs, in a market facing tight supply, have triggered protests in several countries and fears for global economic growth.

Traders will be watching for supply signals in the weekly US Department of Energy report on inventories of crude, due out later Wednesday.

"People are waiting for the US inventory data," said Tetsu Emori, a fund manager with Astmax asset management in Tokyo.

Saudi Arabia, the largest crude oil exporter in the Organisation of the Petroleum Exporting Countries (Opec) cartel, said at a weekend summit of oil consumers and producers that it was raising daily output by more than 200,000 barrels to 9.7 million.

But Emori said the move was not really affecting the price of crude.

Sucden analyst Andrey Kryuchenkov stressed that "overall, the market remains well supported, despite Saudi Arabia's promise to pump more oil".

The Saudi output increase, to counter the fears of inflation-hit consumers, exposed divisions within Opec at the summit.

Opec president Chakib Khelil and others were opposed to increasing production.

"Opec has already done what Opec can do and prices will not come down," Khelil said Tuesday as he arrived for a meeting with European Union energy officials in Brussels.

Consuming nations have been calling for Opec to pump more oil. The cartel produces about 40 percent of the world's crude.

Khelil blamed high prices on the US "subprime crisis and the ensuing impact of the dollar devaluation and the influx of funds that were looking for good returns that they could not find in other investments".

He estimated that hedge fund zeal for positions in the oil market added 40 dollars to crude prices.

"Other member countries don't want to increase their production because, as they've said many times, from our perspective we don't see any shortage in the market," Opec secretary general Abdullah al-Badri said.

Emori said unrest in Nigeria continues to be an important factor in the market.

Anglo-Dutch oil giant Shell said its offshore Bonga oilfield in Nigeria was running again Tuesday after an attack by militants last week halted production.

After the unprecedented raid, Shell had said it could not promise to deliver 225,000 barrels per day for June and July.

Militants also blew up a key Nigerian Chevron supply pipeline late last week, forcing the US oil giant to shut operations, halting output by 120,000 barrels per day, an industry source said.

Oil prices won't come down: Opec president

Oil prices 'will not come down,' Opec president Chakib Khelil said
Tuesday, assuring that the oil cartel has already done what it can on
the matter.

"Opec has already done what Opec can do and prices
will not come down," Khelil told journalists as he arrived for a
meeting with EU energy officials in Brussels.

Ahead of a summit
between producers and consumers in Jeddah last weekend, Opec
heavyweight Saudi Arabia promised on Thursday to lift its oil
production by 200,000 barrels per day.

However, Saudi Arabia's
increased output, to counter the fears of inflation-hit consumers,
exposed divisions within Opec at the summit with Khelil opposed to a
production hike.

In the face of calls from consumer countries
for an oil output hike, Opec secretary general Abdullah al-Badri
insisted that supply was currently sufficient.

"There is no
shortage, the market is full of oil," he assured, blaming "other
factors" for the high price of crude, including refinery problems and
hedge funds piling into the market.

EU Energy Commissioner
Andris Piebalgs urged Opec to do away with the grouping's production
ceiling in order to provide relief to the market.

"In my
opinion, there is no reason to keep ceilings on production," he told
journalists. "If there are no ceilings, markets will adapt much
faster," he added. "In this respect we could expect prices to go down,
not going up as the tendency has been till now."

Oil higher as supply fears return

Oil prices have rebounded as investors begin to consider that a fuel price rise in China may actually increase demand there.

US sweet, light crude rose as much as $4 to $136 a barrel, while London Brent rose $3.52 to $135.52.

The rises almost erased Thursday's losses after the unexpected announcement that China would increase petrol and diesel prices by 18%.

Soaring oil costs will be discussed in Jeddah this weekend at a key meeting.

Oil prices have risen about 40% this year, reaching almost $140 a barrel earlier this week.

Prices in London and New York fell back slightly at the end of their normal trading sessions.

In New York, US light sweet crude was $2.69 higher at $134.62. While in London, Brent crude rose $2.86 to $134.86.

Mixed reaction

China's rapid economic growth has been one factor driving up prices.

Some analysts have said that fuel subsidies in China have helped to increase demand, and an increase in retail prices could dampen energy consumption.

A view that sparked Thursday's sell-off.

But an increasing number of analysts believe the effect could be the opposite, as refiners will be encouraged to increase production to take advantage of the better prices.

This would lead to improved fuel supply at the pumps, which would help to meet pent-up demand.

Chinese fuel prices have been frozen since an 11% rise in November. Refiners have been cutting output to minimise losses and this has led to rationing and queues at petrol stations.

Volatile market

"The markets could go back and forth on the Chinese announcement for a while," said Edward Meir at commodities brokerage MF Global.

With supply running short in many parts of the country, he added, "demand could move even higher, as much of the country's pent-up needs would be met".

Other factors behind the relentless rise in oil prices over the past few months include political problems in major oil producing countries, which have either reduced or threatened to reduce global supply.

Some analysts site this as another reason for Friday's spike.

"Traders don't want to be short going into the weekend, " said Gerard Rigby of Fuel First Consulting in Sydney.

"There are just too many hotspots around the world now. There is more potential for bullish news than bearish news," he said.

Venezuelan President Hugo Chavez has threatened to stop exports to European countries if the EU applies stringent new immigration laws.
His comments came as the country said it would not attend the emergency meeting on Sunday in Saudi Arabia between oil producers and consumers to discuss prices.